As China’s economy is beginning to show signs of stabilizing (Click here), fears of hard landing, and deflation, have largely receded, at least for now. Nevertheless, despite continuing efforts to rein them in, problems of overcapacity remain. Meanwhile, excessive liquidity is being ameliorated with surging outbound direct foreign investments and outflow of capital driven by expectations of a weakening RMB. This is partly reflected in China’s foreign exchange reserves, which peaked at nearly $4 trillion in June 2014 and fell to about $3.2 trillion by January 2016.

Against this backdrop, I now focus on China’s debt problem.

According to a recent McKinsey report, the level of gross debt in 2014 was 282% of GDP. This includes government debt (55% of GDP) and debt owed by financial institutions (65% percent of GDP), nonfinancial corporations (125% of GDP), and households (38% of GDP). Recent estimates suggest that corporate debt may have risen above 150% of GDP by early 2016.

China has traditionally had a low level of foreign-currency external debt. At $800 billion or 7% of GDP in 2015, it is much lower than virtually any other major emerging market.

China has an exceptionally high level of corporate deposit holding, equivalent to 90% of GDP, compared with 7% of GDP in the United States. Albeit a sign of low efficiency of capital utilization, loans are often recycled back to the lending bank as deposits. Nevertheless, this enables the banks to earn high interest spreads and acts as a cushion against exigencies. According to the People’s Bank of China, at the end of 2014, total bank deposits amounted to some US$19 trillion while total loan book stood at US$14 trillion. 45% of the bank deposits came from personal savings while 50% came from enterprises.

Despite rise in credit volumes, China’s economy is not over-indebted while the government possesses adequate capacity to absorb losses. There are also massive private savings, offering scope for the corporate sector to undertake debt-equity swaps.

Non-performing bank loans (NPA) are estimated to range from 6–7% to as much as 25% for some smaller banks. However, unlike those in the West, thanks to “financial repression” limiting deposit interest rates, Chinese banks derive a vast proportion of their funding and profits from stable bank deposits, rather than loan spreads. Moreover, China’s banks are mandated to have about 17% of required reserves at the People’s Bank of China. By way of further insurance, a bank deposit insurance program has been in operation since May 2015.

The balance sheet of the government as a whole is healthier than sometimes surmised. The state has a treasure trove of assets—including its massive foreign exchange reserves, ownership stakes in the state enterprises, and foreign investments through the sovereign wealth fund.

Moreover, a significant proportion of China’s debt, particularly at the local government level, is going into building infrastructure for the largest and fastest urbanization drive in human history. The aim is to turn China into a middle-class country, with long-term social, economic and political benefits. These loans cannot be adequately evaluated on purely commercial terms.

As for State Owned Enterprises, risks should not be based solely on liabilities. Taking into account their massive asset base, their loan-to-equity ratios do not appear excessively-geared (Click here).

The IMF computes a measure of augmented public debt, which includes various types of local government borrowing, including off-budget borrowing by Local Government Financing Vehicles (LGFVs) via bank loans, bonds, trust loans, and other funding sources. By this measure, China’s public debt to GDP ratio is estimated to be 60% in 2015, still below the public debt to GDP ratios of major advanced economies.

Moreover, China’s net foreign assets amounted to $1.6 trillion at the end of 2015, more than enough to cover all of its foreign liabilities.

The picture would not be complete without addressing the related problem of shadow banking.

According to a Brookings Institution Paper in May 2015 (*), China’s shadow banking stood at RMB 25 trillion, or 43% of GDP, in 2013. According to a research paper (16 March, 2015) of the Fung Global Institute, a Hong Kong-based think tank, at the end of 2014, China’s total shadow banking exposure rose to RMB 32.2 trillion, or 51% of GDP. This compares with a global average of 117% of GDP.

Despite its rapid growth, shadow banking, however measured, remains substantially less important than formal banking as a source of credit in China. Nevertheless, the Chinese central government has taken important measures to tackle this issue in recent years.

In October of 2014, a directive entitled “The Directions of the State Council on Management of Local Government Obligations” outlined a framework and principles for regulating how local governments raise, use and repay their debts. In the beginning of 2015, the Ministry of Finance (MOF) approved a local debt swap scheme with a quota of RMB 3 Trillion. Under this scheme, each provincial government is able to sell low-interest local bonds directly to commercial banks to replace high interest debts obtained from shadow banking channels. A quota of RMB 1 trillion has been allocated to the provincial level as of the first quarter of 2015.

China’s shadow banking sector is not especially large by international standards and is relatively unsophisticated, with low levels of instruments such as securitized assets and derivatives. Regulators remain alive to the most important risks, namely funding risk and lack of transparency and have taken prudent steps to minimize them.

In sum, China’s financial system is a work in progress with many reforms and challenges outstanding. This translates to a relatively low level of capital efficiency. However, as pointed out by Eswar Prasad, Senior Fellow at Brookings Institution during his testimony before the U.S. China Economic and Security Review Commission on 27 April 2016, China’s debt problem, whilst serious, presents no systemic risk and is largely manageable. (4)

November 05, 2016

The above Paper dated October 2016 under the Brookings Institution's Order from Chaos Project - Foreign Policy in a Troubled World, is jointly prepared by Philippe Le Corre, visiting fellow at the Center on the United States and Europe and Jonathan Pollack, senior fellow in the John L. Thornton China Center, both at Brookings.

The Paper's thrust is informed by the following extract -

"China’s increasing economic and financial weight touches upon all major issues in the global economy. The advanced industrial states therefore need to fully assess China’s economic policies and practices and how they could affect the future order. These issues range from the rules governing trade, investment, and finance; addressing major imbalances in trade relations; cybersecurity; maritime security; climate change; terrorism; environmental degradation; global poverty alleviation; the role of nongovernmental organizations; the evolution of civil society; and intellectual property rights, to name some of the more important areas.

Moreover, these issues concern the future of governance within China as much as governance between China and the outside world. In this paper, we explore how Europe and the United States might move toward more complementary conceptions of their respective relationships with China.

Though there are areas of commonality between Europe and the United States, their separate identities and interests also reveal significant differences, if not outright divergence. EU-wide and country-specific engagement with China have accelerated dramatically over the past decade, underscoring the challenge of coordinating EU and U.S. policy approaches. Sustainment of the global economic order in the absence of China’s full commitment to existing practices and norms would prove very difficult, especially if China is intent on developing alternative concepts of global governance.

The United States and Europe thus face a common strategic task. Both must ensure that China’s increasing power does not undermine the principles and policies that have enabled unparalleled economic prosperity across multiple decades. They must reaffirm a shared commitment to this institutional framework, while enabling China to emerge a full-fledged participant in the global economy."

Differences of opinion and emphases between the United States and Europe notwithstanding, the Paper recommends a number of China-related priority areas for US-EU coordination, including Investment, Asian Infrastructure Investment Bank (AIIB), One Belt, One Road (OBOR), Rule-based International Order, Climate Change and Civil Society.

November 03, 2016

In a November 2016 report on the rise of the Chinese consumer, the Economist Intelligence Unit (EIU) offers the following findings -

Private consumption is now the main driver of economic growth in China. It will grow in real terms by 5.5% a year on average in 2016-30 – boosting its share of the overall economy to nearly 50%. Incremental growth over the next 15 years is expected to exceed the current level of consumer expenditure in the EU.

Nearly 35% of the population, or around 480m consumers, will meet definitions of upper middle-income and high-income by 2030. That represents a sharp increase on the 10% (132m) at present. They will have a personal disposable income of at least US$10,000 and will alter the consumer landscape in China.

Income will become more dispersed, rather than concentrated in first-tier cities on the eastern coast. Major interior cities, such as Changsha, Chengdu, Chongqing and Wuhan are set to see sizeable leaps, with each having at least 2m high-income consumers by 2030. Nevertheless, smaller cities and those undergoing industrial restructuring risk being left behind, suggesting that high levels of income inequality will persist.

Around 30% of the spending by the average Chinese consumer is still allocated to food, compared with only 15% in South Korea. As income levels rise, consumers will look to upgrade consumption habits and switch to more expensive and premium brands. This will play out in the automotive, tourism and financial services sectors.

As for What is driving the Chinese consumer,, a Mckinsey Report of April, 2016 notes that there are distinctive shifts from products to services, from mass products to premium brands (including loyalty to top international brands), from mere goods to lifestyle, health and well-being, from Online to O2O (Online-to-Offline), from in-store shopping to associated leisure experience on-site such as restaurants and cinemas, and from individual to joint family leisure activities.

October 08, 2016

David Dollar, Senior Fellow, Foreign Policy, Global Economy and Development, John L Thornton China Centre, Brookings Institution, has the following to say in his brief dated 4 October 2016 for the initiative Election 2016 and America's Future -

Trade with China has led to the loss of American manufacturing jobs, reduced real wages for semi-skilled workers, and devastated some communities dependent on low-end manufacturing jobs. These negative effects have naturally given rise to protectionist sentiments in the U.S. presidential campaign and given trade in general a bad name.

China pegged its currency, the yuan, to the U.S. dollar at a rate of 8.3:1 in 1994. This was a reasonable and not unusual choice for a developing economy. The problem is that China had rapid productivity growth that required some appreciation over time. China is fortunate that the dollar was appreciating in the late 1990s so that the yuan appreciated with it in trade-weighted terms. China’s mistake was in following the dollar down in the first half of the 2000s. This resulted in trade-weighted depreciation, just as Chinese productivity really took off. It was at this point that China developed a very large trade surplus that rose above 10 percent of GDP. Pegging the currency to the dollar in the face of a large trade surplus requires the central bank to accumulate reserves, and China’s reserves over this period rose to a global high of $4 trillion.

China shifted off the peg to the dollar in 2005, and over the past decade has allowed significant appreciation of its currency—about 20 percent against the dollar since 2005. The trade-weighted appreciation is more significant (above 40 percent) because the dollar has trended upward over the decade. As a result of this new currency policy, China stopped intervening in the foreign exchange market to accumulate reserves. In fact, for the past year China has been selling reserves to keep the value of its currency high. Its $4 trillion stockpile of reserves has declined to $3.1 trillion. In the face of this new currency policy, China’s trade surplus initially declined. But now it has started to rise again, and one factor is the shift of SOE investment outward. There are also net private outflows of capital, though it is hard to measure these exactly. The growing net capital outflow from China is threatening to take China’s trade surplus back to levels that pose problems for the global economy.

A second and related problem is that China’s policy towards foreign direct investment is highly asymmetric. China is now encouraging its firms to invest abroad in virtually all sectors. Meanwhile, according to an OECD measure of investment restrictiveness, China is the most closed of major economies. It is significantly less open than other emerging markets such as Brazil, India, Mexico, or South Africa.

The growth of the U.S. economy slowed significantly between the 1990s and the 2000s. It would be hard to attribute any significant part of the slowdown to China. While the large trade gap with China is annoying, it is still small compared to the U.S. economy: For example, the $467 billion of imports in 2014 represented less than 3 percent of the U.S. economy. And although the share of manufacturing in employment has been on a slow but steady decline since the 1950s, the share of manufacturing in GDP has been stable.This pattern reflects the relatively faster productivity growth in manufacturing compared to services.

What distinguishes the 2000s from the 1990s is that overall employment growth has been so slow. In thinking about how to deal with China, there is a risk that that issue will distract from more important considerations about how to make U.S. output and employment grow more quickly. The slowdown in U.S. growth can be attributed to a multitude of factors, including the aging population, under-investment in education, under-investment in infrastructure, and the financial crisis that emanated from Wall Street.

While protectionism is tempting, it is almost certain to backfire and cause more economic harm to the United States.

Inducing China to become a more normal trading and investing nation will require a mix of carrots and sticks from the next administration, a policy that could be characterized as “responsible hardball".

As a departure from current policy, the most promising option would be imposing new restrictions on Chinese state enterprises purchasing their competitors in the United States until China opens up reciprocally.

If the TPP is implemented, South Korea and ASEAN members could be attracted to join. It has the potential to spur new supply chains among a group of countries that have to some extent harmonized their regulations on investment, environmental protection, and labor standards. The TPP could be a positive incentive for China to reform.

The United States can also use leverage over China’s desire to be granted market economy status in order to negotiate significant reductions in excess capacity in steel and other heavy industries.

David Dollar doesn't attempt to make a case for condemning China as a "currency manipulator". He also stresses that the United States' growth slow-down is due to internal structural factors which cannot be blamed on China. Nevertheless, he faults China on continuing to peg the RMB to a weakening dollar at a time when China's productivity took off. He also seems to imply that China's recent trend of outward direct investment (ODI) is largely driven by monopolistic state-owned enterprises protected unfairly by China's domestic policies. The truth, however, is more complex.

While it makes good economic sense for the RMB to float freely at some point, this cannot be switched on overnight without a robust and mature financial infrastructure able to withstand the massive ebb and flow of the globalized financial markets.

As for outward investments, it is true that the state-owned enterprises are leading the way in large energy and infrastructural deals in developing countries. However, Chinese acquisitions in advanced countries are increasingly spearheaded by non-government commercial enterprises. Spencer Lake, Global Head of Capital Financing at HSBC, wrote in the Financial Times(30 June, 2015), noting that private investors are becoming the main driving force of China's ODI, targeting agriculture, technologies, high-end manufacturing, consumer goods, real estate, services and brands. Wanda's recent acquisition of the AMC and Legendary cinema chains in the United States is a case in point.

Bearing in mind these complexities, while a “responsible hardball" in pushing against China may serve to hasten China's much-needed state-owned-enterprise reform* and pry open more market opportunities for Western businesses, it begs the question whether it could deliver the silver bullet to turn around the United States' structural economic malaise.

*To understand the complexity of state-owned-enterprise reform, its relation to China's debt explosion, state control over excess capacity, and the imperative of maintaining 6.5% annual growth rate until 2020, visit a Petersen Institute for International Economics (PIIE) panel discussion on 5 October, 2016 “China’s State-Owned Enterprise Reform Process” with speakers including Nicholas R. Lardy. Click here

Visit an article in the Financial Times of 11 October "China approves debt-for-equity programme" on how China attempts to address her massive, unsustainable debt problem. Click hereAccording to the FT article, "Chinese companies have accumulated about $18tn in debt, an amount equivalent to 170 per cent of gross domestic product. The State Council said it would also encourage mergers, bankruptcies and debt securitisation to help reduce leverage across the corporate sector."

Visit also an article in the South China Morning Post of 27 September Why China’s debt is not worth losing any sleep over, just yet. Click here .The article points out that China's total debt ratio of approximately 255% of GDP is still far from being the world’s highest. As for SOEs, not only liabilities but assets should also be included. As for local governments, infrastructural projects should not be treated in the same way as commercial debt, as long-term socio-economic considerations are involved. "What really matters is not total debt per se, but the debt-to-equity ratio, on both the microeconomic and macroeconomic levels. A high debt-to-equity ratio encourages moral hazard and reckless risk-taking, and potentially leads to financial instability. While China should definitely work to lower its overall debt-to-equity ratio, the total debt outstanding per se is still manageable".

September 30, 2016

An in-depth 34-page research Paper dated 2016 by Mikk Raud of the NATO Cooperative Cyber Defence Centre of Excellence (CCDCOE) in Tallinn, Estonia examines China's cyber challenges from an integrated set of social, economic, political, military and national strategic perspectives.

This delves into how US global dominance in cyber technologies and infrastructure is seen as posing security threats to China, how cyberspace is being defined within China's society, how a control-mindset has been developed and entrenched, and how cyber capabilities and innovation are viewed as essential for China national renaissance.

The Paper carefully reviews published high-level Chinese government documents on cyber policies and strategies, including those of the State Council. It dissects China's strategic cyber governance structures, including civilian cyber administrative agencies as well as those in the People's Liberation Army (PLA), such as the 3rd and 4th departments of the General Staff Department and the newly constituted Strategic Support Force (SSF), including aspects of cyber warfare.

The recent creation of a Central Internet Security and Information Leading Group under President Xi Jinping's personal responsibility speaks volumes on how importantly China regards cyber strategy as a vital component of national security as well as China's trajectory to great power status in a new Cyber Age.

August 24, 2016

Following is my response to a critique by Steven Kopits, President of Princeton Energy Advisors, based in Princeton, New Jersey, who featured a recent article in The National Interest, a leading US journal titled China Should Push for American-Style Hegemonyon 3 August, 2016.

"Many thanks for taking a keen interest in my South China Morning Post op-ed article. For ease of reference, a ready link to it is appended here".

"Most of my ten points are inter-related. Instead of a blow-by-blow riposte, here are the main strategic fundamentals which underpin my thinking:

(a) As I tried to outline, the South China Sea is not just about territorial claims, historic or otherwise. It’s no less than China’s national security. China’s long-standing sense of insecurity over the Malacca Dilemma is compounded by US military postures under its Pivot to Asia, with the aim of redeploying 60% of global naval assets to the region. This sense of insecurity is now further sharpened by straining relations with Taiwan under new President Tsai Ing-wen. One should not under-estimate Beijing’s resolve to safeguard such overarching core national interests. China’s development of a blue-water navy, improving A2/AD capabilities, establishment of a nuclear submarine base in Hainan Island, and recent island-building with military facilities in the South China Sea must be seen in this broader context.

(b) Freedom of navigation underpins the economic viability of the South China Sea on which China’s economic survival depends. There is no reason why China wants to disrupt normal mercantile shipping or navigation. Nor would China gain by pushing the US out of the Asia Pacific, even if she could, which she can’t by a long chalk. America is much embedded economically and militarily in the region. But military manoeuvres including fighter-bomber fly-past are a different story. Admittedly, these FONOP activities have been going on for a long time past. But China is much much stronger now compared with say, 20 years ago. Would the United States accept similar Chinese FONOP operations near its shores?

(c) Neither China nor the United States wants a war in the Asia-Pacific. China, because of her myriad domestic challenges and unfinished transition to a more sustainable and balanced socio-economic model. The United States because the American people are getting a little tired of unproductive wars in distant shores. 70% of Americans say it is more important for the next president to focus on domestic policy than foreign policy. Click here The case for US restraint is meticulously presented in a recent 113-page Cato Institute report - Our Foreign Policy Choices – Rethinking America’s Global Role. A resume is here.

(d) Few Chinese now see China as just an Ordinary Power, least of all President Xi. However, the vast majority, including President Xi, do not see China as a new hegemon in an increasingly inter-connected, inter-dependent and multi-polar world. President Xi has on various occasions raised the prospects for what he calls “New Great Power Relations”. The emphasis is on the word “NEW”. The so-called Thucydides Trap doesn’t have to be sprung. Security Dilemma can work either way, in escalation or diffusion. The two countries don’t have to agree on everything. There can be healthy competition and rivalry. But there are also specific areas for cooperation. Trust is a two-way street. War is not inevitable.

(e) A long-view on US-China relations is offered by seasoned diplomat Ambassador J. Stapleton Roy in The Diplomat(August 24, 2016):

“U.S. policy towards China should be based on realistic assumptions. China is surrounded by powerful neighbours. Beijing can no more dominate East Asia than the United States can retain the type of dominance it enjoyed when China was militarily weak. The goal should be to forge a stable military balance with China where each side possesses capabilities sufficient to deter the other from using force to resolve serious differences, while lacking the dominance that could, in the eyes of the other, foster aggressive intentions.

"Beijing is learning that assertive behaviour alienates its neighbours and drives them into the arms of the United States. When it displays readiness to accommodate the interests of countries on its periphery, and relies on consultations and peaceful negotiations to resolve disputes, its neighbours seek the benefits of economic cooperation with China. We should capture and utilize this dynamic in our policy approach, neither provoking China nor giving it free rein to run roughshod over the interests of its neighbours. For effective implementation, this means we must tightly integrate our economic, defence, and diplomatic strategies in East Asia”.

The above echoes what Henry Kissinger thinks in his New York Times best seller – World Order (September 2015). A more nuanced and less militarily-confrontational approach towards China is called for. That is also reflected in my quoted admonitions of Brookings Institution’s Jeffrey Bader on the South China Sea - What the US and China should do in the wake of the South China Sea ruling. Click here

(f) China's trump card is not the military. It's connectivity. China’s growing gravitas as the world’s second largest economy is underpinned by her unique role as a central hub to the globe’s supply and value chain. China is doubling down on this by launching a One Belt, One Road inter-continental strategy of infrastructural connectivity, connecting Central Asia and Western Europe including energy, resources, technologies and other investments even more closely to China. In part this acts as a counterweight to the US Asia Pivot. Perhaps in this vein, our lines of thinking tend to coincide, though I disagree with the idea of hegemony.

July 23, 2016

First of all, it is an obfuscation of the Hague ruling to say that it dashes all of China's territorial claims in the South China Sea.

Right from the start China has been maintaining that the Permanent Court of Arbitration is not a competent authority in settling territorial disputes. In particular, under Article 298 of the United Nations Convention on the Law of the Sea (UNCLOS), a signatory may by a formal written statement, exclude and refuse to accept "any compulsory jurisdiction over any disputes concerning interpretation or practice of the Convention" involving "maritime boundary delimitation, territorial sovereignty, military confrontation, and/or historical titles". Some 30 signatories have so exempted themselves, including China. Click here China is remains consistent in this position.

According to Professor Michael C. Davis of the University of Hong Kong, a specialist in constitutional law, "The Law of the Sea treaty does not cover sovereign claims over disputed islands and the tribunal was not asked to decide such claims. The reservation over maritime delimitation specifically bars such arbitration to delimit overlapping claims to the territorial seas, the exclusive economic zones or the continental shelf".

Contrary to press reports, Professor Davis opines that "the tribunal in fact acknowledged that Taiping and several other outcroppings in the Spratly Islands and Scarborough Shoal are islands entitled to a territorial sea. The tribunal simply lacked jurisdiction to decide who owns them". Click hereTaiping is the largest of the Spratly Islands. It comprises a natural habitat of 1.4 kilometres in length and 0.4 kilometres in width with a variety of fauna and flora. It has daily natural fresh water capacity of 65 metric tons. If, as reported, the tribunal's verdict is that Taiping is no more than a rock, this would fly in the face of logic and beg the question of biased manipulation.

As pointed out by Professor Davis, the Hague tribunal also finds that China’s historical claim to the South China Sea within its "nine dotted lines" was not justified, apparently on the ground that the Chinese government has never adequately explained these "dotted-line" claims. This finding appears to contradict the fact that the tribunal is not empowered to adjudicate on territorial claims and UNCLOS is about the law of the sea, not of the land.

Well before the Hague verdict, China's position was well presented by Madam Fu Ying, Chairperson of China's Foreign Affairs Committee, in an expose in The National Intereston 9 May. 2016.

On the basis of historical facts presented, China had been the victim rather than the aggressor. From China's perspective, her historical territorial rights had been trampled upon and brushed aside while China was too weak to defend herself. Examples include treatment in the 1951 Peace Treaty of San Francisco (which excluded China) of Nansha and other Islands occupied by Imperial Japan. This was followed by serial seizures by Vietnam and the Philippines of islets and reefs claimed by China in the South China Sea. Meanwhile, the recent US Pivot to Asia is vaulted to deploy 60% of America's global naval assets to the region, which has deepened China's sense of insecurity.

China’s "island building” in the South China Sea has provided strategic military assets which strengthen China's hand in these waters. Click here They add to China's preeminent economic might at the centre of the regional supply and production chain. As a "big fish in a small pond", China is able to exercise powerful leverage to press for bilateral negotiations as she consistently proposes. In the light of past humiliations and her current comprehensive national strength, China is unlikely to back down in submission to the Hague ruling.

Even though the United States is slated to deploy two aircraft carrier groups to the South China Sea, taking account of the American people’s growing war-weariness, China does not believe that the United States would resort to an all-out war. Rhetoric on both sides notwithstanding, “Free of Navigation” operations by the US Navy and Air Force, provocative as they are, are no prelude to war provided both sides act with strategic restraint.

It must be noted that big powers have a record of ignoring international verdicts when in conflict with their overriding national interests. Witness America’s unilateral adventures in Nicaragua and Iraq. Click here

In any case, assertiveness in the South China Sea notwithstanding, China still wishes to maintain her image as a responsible stake-holder in the international rule-based order. While China is unlikely to dismantle established assets on the ground, including military installations, China has not ruled out joint exploration (and management) of resources. This means that China may well be amenable to accepting a quid pro quo on the premise of setting aside (as opposed to relinquishing) territorial claims.

Specifically, with considerable economic muscle and capacities for financial largess, China is well positioned to jointly exploit (probably on China's terms) the Reed Bank field, 80 nautical miles northwest of Palawan, which is within the Philippine Exclusive Economic Zone (EEZ) but claimed by China. This field holds a cornucopia of energy resources - an estimated 764 million to 2.2 billion barrels of oil and 7.6 to 22 trillion cubic feet of natural gas. This potential energy supply is much needed to replace the Malampaya gas field, also located offshore west of Palawan. This currently supplies about 30% of Luzon's electricity but is expected to be depleted by 2024-2030. Click here

Similarly, on the fisheries front, it is a sad reality that the region's fishing fleets are going further and further afield owing to depletion of fishing stock near-shore. To maintain sustainability of fishery resources, there is a critical need for closer cooperation and management over the region's fish stock which knows no territorial boundaries. Click here

As the PCA ruling is overwhelming in favor of the Philippines, to avoid unintended escalations, there is a need for strategic restraint on the side of both the Philippines and the United States, which is, after all, not a party to the arbitration. Against suggestions in certain quarters, Jeffrey Bader, Senior Fellow in Foreign Policy at Brookings, argues that on balance, rival territorial claimants should not be encouraged to seek similar PCA rulings. Indeed, he suggests that the United States should do well in encouraging the Philippines to settle differences bilaterally with China. Click here

In the final analysis, setting aside disputes for joint development may usher in a new era of regional stability and should be the most beneficial scenario for all.

June 07, 2016

Live TV interview on 6 June on TRT(Turkish Radio and Television Corporation), Turkey's international English-language broadcaster, on US-China relations, the subject of the 8th US-China Strategic and Economic Dialogue (S&ED) being held in Beijing.

Another TV interview on Reuters on the same day, focusing on the brawl over the South China Sea.